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1/13/10

IKN will return soon, so until then I'll leave you with a quote from my man up there.

“The only people for me are the mad ones, the ones who are mad to live, mad to talk, mad to be saved, desirous of everything at the same time, the ones who never yawn or say a commonplace thing, but burn, burn, burn, like fabulous yellow roman candles exploding like spiders across the stars and in the middle you see the blue centerlight pop and everybody goes "Awww!”

Alex Dalmady (of Allen Stanford whistleblowing fame) has nailed the subject of Venezuelan bonds with this post. I agree with his call and take the liberty of extracting this great little quote:

"Buying Venezuelan debt is like lending money to a wealthy, eccentric and partly insane uncle. You kind of figure he’s good for it, but there’s a good chance he’ll blow his fortune buying real estate on the moon or something and leave you hanging out to dry."

Here's what the cuddly Dr. Morales thought about this Cameron Avatar thingy when he went to see it last weekend (along with his 15yo daughter, and apparently only the 3rd time he's been to the movies):

"The movie contains a high dose of fantasy (fiction) but is at the same time a profound example of the resistance to capitalism and the fight for the defence of nature."

Hot on the heels of the post on that other Peruvian alluvial gold scam Affinity Mining (79F.f) yesterday (which is down another 25% today, btw) let's check in on the smoke'n'mirrors special we all love to giggle at, Constitution Mining (CMIN.ob), and see how it's been getting on in 2010:

What? over 30% down since December 31st? Let's check in with our friend the owl and get his thoughts on the share price evolution of CMIN.ob these last few days:

Disclosure: No position in either stock. Not long, not short, not nothing. Do what this humble corner of cyberspace does and simply avoid these scam-ridden stocks like the plague. The only people ever to get rich off these crudballs are the insiders. Period. And just in case you think I haven't checked on CMON.ob and I'm just making shit up, have a look at this previous post, my Swiss visiting readers. There's a whole buncha stuff here, too. Enjoy!

First, this chart (stolen from Schuldt and re-dubbed into English) shows how Peruvians think things are now compared to the same time last year. When answering the question, "Are you much better off, better off, the same, worse off or much worse off than this time last year?".....

...17% said "better/much better off", 26% said "worse/much worse off" and 57% said "the same". So at first light it looks as though Peru's citizens have found themselves a little bit worse off, but basically the country has been treading water for the last year.

But then if we delve deeper into the IPSOS-Apoyo numbers, something different is seen. When the survey results are split into socioeconomic grouping (in the system, the A's are the hoi polloi and the E's are the scummy proles that they try their hardest to ignore) new pattern comes to light. This chart shows how many of each sector think they're better off than this time last year:

And this chart (note the green/red colour coding...subtle, aren't I?) gives us percentages for the same groups who consider themselves worse off than last year.

Hey wow, shock and surprise: In SEG A, 31% are better off and 12% worse off. And then in SEG E, 3% are better off and 31% worse off. Hoodathunkit, eh? Or in other words, the rich get richer and the poor get poorer. Check Jurgen's blog for more details.

More insider selling at Colossus (CSI.to) where persona non grata at Serra Pelada Kishida dumps more, along with head honcho Sussman and another 10k at $5.90 on December 30th finally filed. You have to wonder why these people are so keen on dumping at these current levels........

Meanwhile, reporting direct from HowTheOtherHalfLives, we catch up with Haywood's Chairman John Tognetti who's been shuffling a few tokens around and selling chunks of fast-rising hotpot Mirasol (MRZ.v)...

But then again, as the Tognetti dude still has 4,050,000 shares of MRZ.v and 5,139,450 shares of XAU.to hanging around (as well as a whole bucketful of in-the-money warrants and stuff) I hardly think we should worry about this one too much. Probably paying his lunch tab or something.......

1/11/10

On December 16th 2009 this humble corner of cyberspace noted one of the many OTC gold scams that float like flotsam and jetsam on the market tide, a total scam job named Affinity Gold that trades in Frankfurt under the ticker (79F.f), as well as under the (AFYG.ob) ticker in the US OTC market.

Here's a one month chart to show just how it's been getting on since then:

Bell Copper (BCU.v) down 3.1% at $0.155. Well I got this one right when I called it a dog, anyway.

Dynasty Metals (DMM.to) up 1.9% at $5.35. A quick note to subscribers: I've half done what I said I'd do yesterday.

MAG Silver (MVG) up 2.5% at U$6.87 on ok-ish volumes, but if those self-servers at board level decide to inside sell into this upswing again, I'll personally track 'em down and do something nasty like spill tepid coffee in their laps....or something....grrrrr.

Radius Gold (RDU.v) up 5.8% at $0.365. The centre of the Ridgway universe made big strides last week and is moving again today on good volumes. I own and have a target price (that I'm sticking to, fwiw).

Fortuna Silver (FVI.v) up 2.2% at $2.84 and was over three at the bell this morning. I wonder how long our new target price will last? I note the Can of Corn pumping Nicholas CampbellSoup's version in Morning Coffee again, too. When they wanna push, they push. DYODD, dudes.

Rusoro (RML.v) up 9.9% at $0.50 and getting a bounce from the Venezuelan deval news. The theory is that RML will be able to sell its gold abroad at the new 4.3 rate instead of the parallel 6.15/6.3 or so. We shall see how this pans out.

Bizarrely, I'm now getting crits from readers wondering why I haven't written anything on the Venezuelan devaluation. Well, in fact I have.

1) This time last year I was saying that Venezuela would devalue in the second half of 2009 (here's one example post, plenty of others if you're that bothered to check back). So I missed my prediction by nine days. Bite me.

2) This weekend your scribe put together a note on the deval as part of IKN37 that was published yesterday to subscribers. So ahhhh, what da hell..here it is below. But really, with the world and his wife all throwing in their opinions (from the smart to the stupid to the downright dishonest revisionist theories of the Caracazo), I really don't see why you need this humble corner of cyberspace chipping in, too. But hey...that's just me.

Anyway, here are the mumblings that came as part of IKN37 yesterday.

Venezuela: The fixed currency moves

So, I missed on my forecast of “Venezuela will devalue the VEF in the second half of 2009” by nine days, having said on plenty of occasions that I thought Venezuela would deval in the second half of 2009 ( example (6)).

The surprise here is not the fact that Venezuela has devalued its currency, the Bolivar Fuerte (VEF), as it was obviously overvalued against peers and fighting a parallel rate nearly three times its official face value. After all, I’m writing for an audience that understands gold the metal here...I feel no need to explain how fiat currencies naturally devalue over time as the concept is clear to all and any attempt to artificially prop up a currency value is doomed to failure over time. Neither is the surprise those shills that call it a humiliation for Chávez, as the real humiliation would have been to hold the status quo and watch the country go to the dogs. For sure Chávez has been stubborn about not devaluing the VEF for about a year or so (because he’s really not very good at economics) but he’s finally bitten the bullet. Finally, there’s no surprise about the sudden rise in pseudomath around this subject; as just one example we have Venezuela’s El Universo newspaper (opposition bias) telling its readers that the basket of goods needed for basic needs will exactly double in price as of tomorrow (7). The kind of silly stuff written by people that don’t understand money’s role. Expect plenty more.

The surprise here is the depth of the deval. The new official rate (to be used for certain infrastructure and food related imports) of 2.6/1 is basically for show, as the real new rate is the so-called “oil dollar” rate of 4.3/1, the one used for oil revenues brought in to Venezuela by PDVSA. This revenue is the lifeblood of the economy, and suddenly PDVSA will be adding plenty more VEF into the local economy for every dollar deposited. Many were expecting this deval, but not as drastic a measure as a doubling of the forex. In effect, Venezuela has, in one fell swoop, turned its currency from “expensive” to “reasonably cheap”.

It smacks of getting all the bad news out of the way in one go. The main bad news will take the form of an immediate dose of high inflation for Venezuela (perhaps ‘even higher’ is a better term, as 2009 CPI came in at 25.1%). This is the bitter pill for ordinary José Q. Citizen to swallow in 2010, but macroeconomic theory says that the inflation bump should be a temporary hurdle. Venezuela has neglected its local economy and has been running on imported goods, thanks to the cheap dollar prices brought about by the 2.15/1 rate. Up to now it’s been between difficult and impossible for local manufacturers to compete on a price basis against imports. Now that the forex rate has doubled, this means imported goods should get expensive compared to locally produced goods and the Venezuelan internal economy should reactivate. True also for exports, and given time Venezuela can start making inroads into the heavy reliance it has on oil as its main export good. The problem is that such a reactivation takes time and the lag in firing up factories means that in the meantime people are obliged to buy the price-bumped goods from abroad. That’s called price inflation.

Next problem: Fiscally, Venezuela runs the risk of overstoking the economy at a governmental level. With more VEFs for every dollar, the temptation to spend its way out of trouble will be high, perhaps even irresistible. This is another aggregate to inflation that has to be watched in the medium term and the prudence (or not) of central government will be key in reining in any extra inflationary impetus.

On a monetary level, the move is positive. With U$7Bn now coming out of CenBank reserves this will leave around U$27.8Bn in the reserves. This still needs to climb compared to M2 levels in Venezuela (currentlyVEF236Bn is in circulation in the country) but the move to cover VEF 4.3 with every dollar brought in will help bring that under control in the medium term.

The bottom line to this quick’n’dirty on the Venezuelan devaluation is that it might be late coming, and Chávez&Co is certainly setting itself up for political flack from the inflation in the immediate pipeline, but the move is the correct one economically speaking. It would have been better perhaps last year, but doing it in 2010 is a mile better than doing it in 2011. However the inflation that Venezuela will suffer in the short term due to higher prices for imported goods may turn into a longer bout due to governmental spending spree of the extra available VEF funds. Time will tell on that score.

Yenique Chance, a former student who went to Peru on a six-month Spanish course, last week said that not only was she humiliated at the Lima Airport in Peru, but airport authorities told her that the treatment meted out to her was because she was Jamaican.

..........

"I was taken out of the line and my baggage thrown around while I was abused and treated badly," said Chance, who added that the moment she started to cry airport officials began laughing at her.

"I was humiliated. They took me out of the line, destroyed some of my documents and when I asked why, they said that the fact that I was Jamaican and also it was the first [time] they were seeing someone from the country coming to Cusco where I was staying," Chance said.

.....the gold/silver ratio.Waiter: "Are you ready to order, sir?"Customer: "What are the house specials?"Waiter: "Well, sir, our most popular dishes are 'fear' and 'greed'."Customer: "Hmmmm....I think I'll have the 'greed' today."Waiter: "Something to drink to go with that, sir?"Customer: "Yes, a mojito."

1/10/10

The other day IKN ran aquick note on Jessica Jordan, ex-Miss Bolivia and current candidate for governor of Beni for Evo's MAS party. As you've come to expect, IKN's coverage was wafer thin and snarky but I'm happy to say that somebody who really knows the scene in Bolivia has written much more about Jordan and has given us a lot more background.

UPDATE: It looks like she can't run, after all. This report explains that not only is Jordan too young to run (she needs to be 25), she doesn't reside in Beni. The analyst seems to think that Evo has set all this up as a publicity campaign.

If you're going to write hatemail, don't start your spewing filth with "Dear Idiot", as Google mail offers up the first line written in the inbox and there's never any need to open the mail in order to find out what ill-informed bullshit has been written under such an opening line. Or in other words, all that time you took on spellchecker has been totally wasted and your words will never be read by anyone.

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